In which scenario are goods still in transit that allow the unpaid seller to exercise stoppage in transitu in case of buyer insolvency?

In which scenario are goods still in transit that allow the unpaid seller to exercise stoppage in transitu in case of buyer insolvency?

• A. If the buyer obtains delivery of the goods before arrival at the appointed destination.
• B. If the carrier or other bailee acknowledges to the buyer or his agent, that he is holding the goods in his behalf, after arrival of the goods at their appointed destination.
• C. If the carrier or other bailee wrongfully refuses to deliver the goods to buyer or his agent.
• D. If the goods are rejected by the buyer, and the carrier or other bailee continues in possession of them, even if the seller has refused to receive them back.

Answer: (D)

Stoppage in transit is the unpaid seller’s right to reclaim goods while they are still moving toward the buyer, provided the buyer has become insolvent and the goods have not yet been delivered to the buyer or his agent. In the described scenario, the goods are still in transit with the carrier, the buyer has rejected them, and the carrier or bailee remains in possession. Because the seller is unpaid and the buyer is insolvent, the seller may exercise stoppage in transit to recover the goods from the carrier before delivery to the buyer’s hands. The fact that the seller has refused to take the goods back does not negate this right—the carrier is obligated to return the goods to the seller, preserving the seller’s remedy during transit. The other situations fail because delivery to the buyer or arrival at the destination ends the transit status, or the goods are no longer in the period when stoppage in transit applies.

Stoppage in transit is the unpaid seller’s right to reclaim goods while they are still moving toward the buyer, provided the buyer has become insolvent and the goods have not yet been delivered to the buyer or his agent. In the described scenario, the goods are still in transit with the carrier, the buyer has rejected them, and the carrier or bailee remains in possession. Because the seller is unpaid and the buyer is insolvent, the seller may exercise stoppage in transit to recover the goods from the carrier before delivery to the buyer’s hands. The fact that the seller has refused to take the goods back does not negate this right—the carrier is obligated to return the goods to the seller, preserving the seller’s remedy during transit. The other situations fail because delivery to the buyer or arrival at the destination ends the transit status, or the goods are no longer in the period when stoppage in transit applies.